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COVID-19 'panic buying' adds to already-strained drug supply at US hospitals

As hospitals rushed to stock up on new treatments for COVID-19 in the early days of the pandemic, they were met with drug shortages and supply chain issues that the industry had long contended with before the crisis.

When the coronavirus began spreading in the U.S. earlier this year, little was known about how to treat patients with or suspected of having COVID-19. Treatment and intervention information was shared if any success was found, traveling via preprint servers for medical journals and even on Twitter "at the speed of light," said Steven Lucio, vice president of pharmacy solutions for Vizient Inc., a group purchasing organization.

SNL Image

The speed of information sharing subsequently led to rushes in purchases from hospitals, complicating the process of filling inventories and creating shortages for certain drugs as orders mounted, Lucio said.

Vizient tracks 211 drugs considered essential medications that could threaten patient care if unavailable; 38% of them were found to be in short supply in a May report.

Medications known as ventilator drugs — which include sedatives, painkillers, paralytics and vasopressors — became some of the most sought-after products at the height of the pandemic and were most at risk of shortages as hospitals stocked up, according to Lucio.

The U.S. Food and Drug Administration on Aug. 4 reminded the industry of proper "in-use time" procedures for critical drugs, amid reports that some facilities and providers were considering using drugs that were in limited supply beyond the time frame noted on their labels. According to the memo, in-use time is the time within which a drug must be used after being prepared. These limits are set on drugs that could degrade after preparation and raise safety concerns if used beyond a certain period of time.

"It is impossible, really, for the supply chain to replicate the supply and consistency with the demand. You can't do it," Lucio said.

READ MORE: Sign up for our weekly Essential Healthcare newsletter here.

Dexamethasone, a generic corticosterioid hormone drug manufactured and sold by more than a dozen companies is classified as "currently in shortage" by the FDA. Manufacturers Aurobindo Pharma Ltd., Fresenius Kabi USA LLC, Hikma Pharmaceuticals USA Inc., Mylan Institutional Inc. and Somerset Therapeutics, LLC have reported shortages in August mostly due to an increase in demand. The injected treatment has been found to improve survival in patients with COVID-19.

Orders for dexamethasone increased by as much as 600% in one week. Orders for hydroxychloroquine, an immunosuppressant drug touted by President Donald Trump but largely believed to not be an effective treatment for COVID-19, grew by as much as 1,000%, according to Lucio.

As pressure on the supply chain mounted and risk of shortages increased, orders were not fulfilled strategically based on need and whether facilities were located in a pandemic hot-spot or region with rising cases.

"You had two events occurring at the same time: you had hot-spots where you had actual patients that needed product, and then you had folks who were preparing for the eventuality of having patients," said Paula Gurz, senior director of pharmacy contracting for Premier Inc., another group purchasing organization, in an interview.

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Premier managed through the jump in demand in the early months of the pandemic, according to Soumi Saha, senior director of advocacy for Premier. But a combination of increased demand from hot-spot regions, facilities stockpiling drugs and regular orders as hospitals restart elective care is continuing to strain the supply chain.

Hospitals rushed to acquire inexpensive generic medicines that Saha called the "warhorse" drugs, but manufacturers have little incentive to ramp up production due to the low cost and therefore limited return on investment.

Preparing for the unknown

Much of the panic buying from hospitals resulted from a lack of transparency regarding the stockpile, according to Saha. Hospitals were at times unsure how much of a drug was available or whether the product was being distributed adequately.

Allocation strategies for drugs and other products are based on past purchases, which does not account for any patient surges, according to Saha.

"If you used to purchase 100 units month over month, you get 100 units now, but [the allocation process does not] account for the fact that you're in New York and you're now seeing 4,000 times more patients than you ever had before," Saha said.

A more transparent system that relies on data could solve some drug allocation challenges during patient surges, Saha added.

"The more purchasers know, the less you'll see panic buying," Saha said.

A lack of transparency in the supply chain can also cloud manufacturing practices and create quality issues with products, which has contributed to a 20-year era of drug shortages, Lucio said. Vizient, hospitals and sometimes even the U.S. Food and Drug Administration do not know where certain drugs are manufactured or pharmaceuticals originate.

"There have been manufacturing problems, pharmaceutical plants have had to shut down, there's not been a great deal of diversity or excess capacity, and so the market suddenly goes to either only a single supplier or no suppliers," Lucio said.

SNL ImageVizient Vice President of Pharmacy Solutions Steven Lucio
Source: Vizient Inc.

Curbing the next crisis

While coronavirus has shone a spotlight on the supply chain, the issues are not specific to the pandemic.

"What we're trying to foster is that redundant supply channel that can withstand any sort of interruption," Lucio said. "Because right now it's a pandemic, and that can certainly occur again. But we've had hurricanes, we've had earthquakes, it could be any sort of thing."

Lessons to be learned from the current pandemic include the importance of keeping lines of communication open and ensuring that supply chains are stable and globally sourced, Lucio said.

"Drug companies will do whatever they can to try and produce more product where it's needed," Lucio said. "But one of the key things this crisis has illustrated is the absolute necessity for communication throughout the supply channel."

The goal is to ensure that everyone, including manufacturers, distributors, the FDA and even the U.S. Drug Enforcement Agency — in the case of controlled substances like opioid painkillers — knows where a product is needed and where the demand is changing, Lucio said.

"What we know now is that just-in-time inventory does not work for the small percentage of drugs and medical supplies that are needed during pandemic response," Premier's Saha said. Instead, supplies of critical drugs and supplies need to be resilient with redundancies built in and contingency plans in case supply is disrupted.